Severstal reports Q3 & 9M 2017 operational results
Moscow, Russia – 10 October 2017 – PAO Severstal
(MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading vertically integrated
steel and steel-related mining companies, today announces its operational
results for Q3 & 9M 2017.
Q3 2017 GROUP HIGHLIGHTS
- Hot metal output remained almost unchanged at 2.23 mln tonnes (Q2 2017:
2.24 mln tonnes) compared with the previous quarter, whereas crude steel
production was up 4% at 2.94 mln tonnes (Q2 2017: 2.83 mln tonnes). Crude steel
output at CherMK in Q2 2017 was lower due to planned maintenance works at
- Consolidated steel product sales continued to grow in Q3, up 4% q/q to 2.86
mln tonnes, following 9% q/q growth in the previous quarter (Q2 2017: 2.75 mln
tonnes). During Q3, the Company continued to sell stocks of HVA products
accumulated in previous periods in response to increased demand and the ongoing
construction season in Russia. Semi-finished product sales were impacted by
inventory level normalisation following maintenance works at converter #1 in
- The share of domestic sales volumes within the sales mix increased to 65%
(Q2 2017: 60%). Improved domestic demand in Q3 was driven by the ongoing
- The share of high value-added (HVA) products within the sales portfolio
increased significantly, to 49% (Q2 2017: 44%), driven by a destocking of large
diameter pipes, cold-rolled, HDG and colour-coated products.
- Coking coal concentrate sales volumes from Vorkutaugol increased 11% driven
by an increase in production volumes following the planned long-wall
repositioning at the Vorkutinskaya and Komsomolskaya mines in H1 2017.
- Iron ore pellet sales decreased 17% and totalled 2.38 mln tonnes (Q2 2017:
2.88 mln tonnes) despite the increase in production volumes q/q. This was due
to higher share of finished goods in transit and accumulation of stocks at the
end of Q3, following Q2 sell-off. The Company expects an uptick in pellet sales
volumes in subsequent periods.
- Raw material prices were supported by strong steel demand in China during
Q3. Export steel prices started to recover, and Russian domestic steel prices
followed global trends, but with a time lag. Industry experts anticipate
Russian domestic steel demand to increase 5% for 2017. On October 6,
2017 the EU Commission imposed definitive anti-dumping duties
against Russian, Ukrainian, Iranian and Brazilian steelmakers. As a result of
Severstal’s track record of balanced and cautious European sales, the
Company got the lowest duty rate among all exporting companies under the
investigation, which is even lower than 5.3% for the current price level. The
ruling has some slight negative financial effects which are estimated to be
immaterial versus our annual earnings and which are fully offset by the ability
for us to continue serving our European customers.